Before I directly answer your question it is important to explain with the CAIVRS database is and how it impacts your ability to qualify for certain mortgage programs. CAIVRS stands for Credit Alert Interactive Verification Reporting System. Simply put, CAIVRS is a database run by the government -- HUD specifically -- that keeps track of borrowers who are delinquent on, defaulted on or had a claim paid on a government-backed loan.
Defaulting on a loan means that you failed to repay a debt under the loan terms. Having a claim paid on a loan means that the federal government paid an insurance claim on a loan you were responsible for. For example, if the government was required to pay a lender for lost principal according to the terms of FHA mortgage insurance, then this means the government paid a claim on your loan.
The CAIVRS database keeps track of delinquencies, defaults and claims paid on all government direct and guaranteed loan programs including FHA, USDA and VA mortgages, Small Business Association (SBA) loans and federally-backed student loans. Understanding if you are in the CAIVRS system is important because it impacts your ability to get approved for a mortgage or other type of loan.
Although most people who default or have a claim paid on their loan are aware of the issue, it can be challenging to confirm if your name appears in the CAIVRS database because only approved lenders can access it. When you apply for a government-backed loan, such as a new mortgage, the lender checks the CAIVRS database.
If you are in the system, it may be impossible for you to qualify for a government-backed mortgage program or you may need to satisfy a waiting period before you can apply for the program. For example, if you experienced a foreclosure with an FHA or VA mortgage, the waiting period is three and two years, respectively. The waiting periods may be shorter if an extenuating circumstance such as a job loss or medical illness contributed to the loan default.
It is important to highlight that lenders usually only check the CAIVRS database when you apply for a government-backed mortgage program such as an FHA, VA or USDA loan. If you apply for a conventional mortgage, which is not backed by the government, the lender should not check CAIVRS so appearing in the database should not directly impact your ability to qualify for the loan.
That said, delinquent or defaulted government-backed mortgages and loans usually appear on your credit report, which lenders review when you apply for a conventional mortgage. Depending on the timing of the loan default or delinquency and if the issue has been resolved satisfactorily, it may negatively impact your credit score which can make it more challenging to qualify for a conventional mortgage.
If you have a good credit score and meet the other qualification requirements then you should be able to qualify for a conventional mortgage even if you appear in the CAIVRS database. Because you are applying for a conventional loan, there is a good chance the lender does not check the CAIVRS database and relies solely on your credit report to assess your creditworthiness. This is why you should always review your credit report several months before you apply for a mortgage so you can identify and address any issues, including how past loans appear on your report.
After you have reviewed your credit report, we recommend that you contact multiple lenders to understand how they would handle your unique situation. You can review lenders in your area in the table below. We advise you to contact at least five lenders as qualification guidelines vary, especially as it relates to credit challenges. Plus, shopping multiple lenders is the best way to save money on your mortgage.
We also provide a comprehensive overview of your credit score and the mortgage process as well as a helpful explanation of how to improve your credit score before you apply for a mortgage that you can review.